[HN Gopher] Financial innovations brought by technology
___________________________________________________________________
Financial innovations brought by technology
Author : clessg
Score : 217 points
Date : 2021-10-29 15:07 UTC (7 hours ago)
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| toomuchtodo wrote:
| A bit disappointed the Fed's instant payment system (FedNow),
| going live in 2023, wasn't mentioned (although Zelle and private
| wallets like Venmo and Cash App were). The knock on effect from
| this will be a decline in neobanks (Chime, for example) funding
| themselves from interchange fees, necessitating free deposit
| account support through policy (as commercial banks don't want to
| provide these accounts at a loss and interest income would be
| insufficient to be self sustaining).
|
| 54 other countries already have instant payment systems, and
| utility priced (ie very cheap) instant payment infra _is_ the
| innovation. America is just catching up the the developed world,
| financial services speaking. After deposit accounts and instant
| payments are solidified, the remaining innovation is...lending
| (securitize all the things, real estate, autos, factoring, float,
| etc).
|
| The remittance cost piece was spot on though wrt to Wise.
| Surprised we haven't seen more copycats, but it turns out culture
| and management are the hard parts, not the tech.
| digianarchist wrote:
| The EU's SEPA Instant Credit transfer is another example as is
| the UK Faster Payments network.
|
| On the flip side if you need an example of stifiled innovation
| with no near future improvements on the horizon, just look at
| Canada's pathetic excuse of a banking system.
| waynesonfire wrote:
| Banks should be required by law to expose an api.
|
| Plaid is a billion dollar web scraper and privacy violater that
| works around this omission.
| dragonwriter wrote:
| > Banks should be rewuired by law to expose an api
|
| Like health insurance business transactions, there should be
| mandatory standards for both the data structures and operating
| rules for such an API as well. (But they should not be as
| horrible as the standards and operating rules adopted for
| healthcare.)
| sfjailbird wrote:
| That's what the EU's PSD2 regulations are about.
| mNovak wrote:
| I've seen the most innovation in this space happening for
| business checking accounts. We recently switched over to Mercury,
| which truly has no fees I'm aware of (even international wires
| are free); which is wild for us coming from PNC, which wanted
| monthly fees to send over $5k in ACH transfers (try running a
| business on that).
|
| I'm still waiting to see an identically flexible account for
| personal use, not just business, though.
| mmd45 wrote:
| interersting. does mercury support bill pay? can you get a
| cashier's check? how long do deposited checks take to become
| available for withdrawal?
| mNovak wrote:
| Bill pay is generally just ACH, so yes. I'm not sure if they
| do cashiers checks though; their tradeoff is that they are
| electronic only, so physical checks and cash are not well
| supported.
| bityard wrote:
| The author seems to be deliberately conflating "free banking"
| with "no overdraft fees", which is extremely misleading.
|
| I have had "free" banking for over 20 years, by going through
| credit unions instead of banks. Credit unions are identical to
| banks, with the exception that they are (usually? always?) non-
| profits and generally do not charge fees for having an account.
| There are limits on withdrawals, transfers, and fees for things
| like wire transfers that do not affect the average family. They
| also have some condition of membership but these days, living,
| working, or going to school within their service area suffice.
| Almost every area in the US has a credit union. There is no
| reason to open an account at a commercial bank. Every time I have
| opened a checking account (for temporary business purposes) at a
| bank instead of a credit union account, I have regretted it.
|
| Now, overdraft protection fees. These are a completely separate
| topic that is applicable to both banks and credit unions. These
| are completely optional, by law. If you have a habit of regularly
| withdrawing more than you deposit, you can call up your bank/CU
| right now and tell them to take it off of your account. The
| tradeoff is that your checks will bounce. Either way, the
| solution is simple: Keep track of your balance and don't
| overdraw.
|
| The author also thumbs his nose at paper checks, but most
| traditional small businesses in the US don't have much of a
| choice: checks are how money moves because they leave a paper
| trail. Which is important because the security of the whole US
| banking system is based on after-the-fact audits. This is a
| double-edged sword because while it allows (some kinds of) fraud,
| it's also easier to clean up. If someone steals Gradma's check
| book, most banks will bend over backwards to help her because
| they want to keep her as a customer. If someone steals Grandma's
| bitcoin wallet, she is just simply fucked and that's the end of
| that.
|
| I agree that the ACH system is largely a dumpster fire, though.
| Plasmoid wrote:
| That's the argument he's making. Checking is only free because
| it's being paid for by people who who run up fees, and these
| people tend to be poor.
|
| It would be more fair for everyone to pay the same for a
| service, but banks decided it was "better" to get 10% of the
| population to pay for it.
| clairity wrote:
| no, fees are pure profit in most cases. loans made with
| deposits more than pays for operating costs of checking
| accounts. banks that say different are fibbing.
| mindslight wrote:
| Local commercial banks can have a similar experience to credit
| unions (at least until they get bought out).
|
| FWIW "overdraft fees" and "overdraft protection fees" are two
| different things. If you do not sign up for "overdraft
| protection service", then when a check bounces, your account
| will generally get charged an "overdraft fee", and the person
| trying to deposit the check will generally get charged a
| similar fee for the checking having bounced. Hence businesses
| (that still take checks) having notices about passing their
| banks fee back to you if you write them a bad check. If you try
| to use your debit card, the card will be declined, since it is
| an online transaction.
|
| If you do sign up for "overdraft protection service", then the
| bank will extend you a small line of credit. When a check would
| bounce, the bank will honor the check but charge you an
| "overdraft protection fee". This fee is usually the same amount
| as an "overdraft fee" would have been, but depositing the check
| will have been successful, saving the fee on the other side.
| However, I _think_ that such services tend to also apply to
| debit card transactions, so if you swipe your card and overdraw
| your account, the transaction will go through but you 'll get
| dinged with that fee.
|
| Whether it benefits you to sign up for such a service will thus
| depend on your expected usage and the banks specific terms.
| Which back to the general point about banks attempting to
| create revenue by nickle and diming customers with an arbitrary
| fee structure - this is just another facet you need to know
| about to avoid them. I've never paid a monthly or punitive bank
| fee in my life, so I started off a bit skeptical of the
| article. But I've still had to deal with the existence of such
| fees, whether by double checking transactions, making sure to
| keep a minimum balance, or having to get management to remove
| erroneously assessed fees. The increased share of large online-
| only (or online-first) banks has created a good amount of
| competition that has driven the prevalence and dollar amount of
| such fees down.
|
| FWIW last time I did a comparison of the large online banks, I
| saw that Capital One has an (optional) feature whereby if you
| overdraft your account, it's treated as a regular line of
| credit with a reasonable interest rate and no fees. This is
| probably the best option for someone concerned about regular
| overdrafts. The trade off is that their customer service sucks.
| endisneigh wrote:
| The things described in the article are certainly good but I
| don't count any of them as "innovation."
|
| - Many countries have had free banking for decades now. The USA's
| banks have finally decided to stop gouging their prices, but
| that's hardly innovation. Overdraft fees basically are just a
| made up problem in order to extract money from customers.
| European banks have had a notion of "no money, no purchase" for
| ages now.
|
| Ditto with fast transfers and lower remittance.
|
| ---
|
| True innovation would be more control over your money. For
| example, you could have a bank account with $100 in it, and you
| allocate dollars $0-50 to be "online" money. This can mean
| different things, but for the sake of example let's say that
| means that you can go to https://bank.com/user/endisneigh and if
| I give you a special code that I create you can take an amount of
| money directly from my bank account, specified by the code. No
| need to use something like stripe.
|
| Another example could be the ability to automatically change
| where money goes depending on its source. Got a deposit via
| Venmo? It goes to X. From your work? Goes to Y.
|
| The future is programmable money. _That 's innovation_ IMHO.
| Dobbs wrote:
| > True innovation would be more control over your money. For
| example, you could have a bank account with $100 in it, and you
| allocate dollars $0-50 to be "online" money. This can mean
| different things, but for the sake of example let's say that
| means that you can go to https://bank.com/user/endisneigh and
| if I give you a special code that I create you can take an
| amount of money directly from my bank account, specified by the
| code. No need to use something like stripe.
|
| This is a thing in the Netherlands, between iDeal / Tikkie /
| and bank transfers. iDeal is used for payments online, it
| depends a tiny bit on your bank but you get a QR code and you
| scan it, it then does a direct bank payment from your bank to
| their account.
|
| Tikkie is similar but is p2p. I can create a link or a QR code
| and send it to people. They can then use the link or QR code
| and send me money. Alternatively you can just use my account
| number (an IBAN printed on the card) and just transfer money.
| vineyardmike wrote:
| > Tikkie is similar but is p2p. I can create a link or a QR
| code and send it to people. They can then use the link or QR
| code and send me money.
|
| Isn't that just PayPal/Venmo?
| okwubodu wrote:
| > The future is programmable money. That's innovation IMHO.
|
| What you've described can be done today with smart contracts on
| a number of blockchains.
| haskellandchill wrote:
| It can also be done without those things, using code and
| financial APIs.
| okwubodu wrote:
| I assumed APIs were ruled out when endisneigh said "No need
| to use something like stripe."
|
| Are there really publicly accessible APIs I use to deploy
| that idea today?
| haskellandchill wrote:
| You can always sacrifice speed for security. I like this
| design which was used to manage bitcoin:
| http://trilema.com/2013/mpex-tech-stuff/. Blockchain is a
| way of creating distributed ledgers. The rest is
| ideology. If you are making a publicly accessible API you
| can chose how to implement it. Regulations were applied
| to digital cash but given more run room with crypto.
| bduerst wrote:
| It seems like Chime, Rho and a few others from the
| article are built on said APIs.
| lmilcin wrote:
| Free banking is a lie.
|
| Banks are making money by taxing every transaction you make
| with your credit card. People would be shocked how much they
| are paying the bank for the convenience if they were presented
| with accumulated, monthly payments.
|
| This is all very cleverly architected so that you, the
| consumer, don't have to explicitly pay for anything.
|
| It makes sense for banks to offer "free" checking account and
| "free" credit cards. They don't want you to be concerned
| because they earn so much more on interchange fees.
| clusterfish wrote:
| True, in the US. In quite a few countries most people use
| national debit cards with transaction processing fees in the
| 1 cent range, and in EU credit card interchange fees are
| capped by law to something like 0.3%. such low fees also
| eliminate anticompetitive credit card cashback offers which
| are so common in the US.
| [deleted]
| NikolaNovak wrote:
| I kinda agree and disagree I suppose.
|
| I lived in USA in the 90's and then moved to Canada. Banking
| system here seemed _lightyears_ ahead of American in terms of
| functionality, user-friendliness, technology. And it seemed to
| endure until relatively recently. By all accounts, Canada is
| behind truly innovative places.
|
| So, though it's late to the game, a lot of those things are
| still "innovation", to USA, late-trickling as they may be.
| AshamedCaptain wrote:
| It is incredible how simple it would be for banks to allow you
| to create an unlimited number of "accounts" (they are just yet
| another row on their database, after all), and yet how few
| banks actually allow you to do that without paying ridiculous
| amounts of fees.
| bduerst wrote:
| A bank account object is tied to legal and reglatory
| stipulations though, as well as separate insurance and other
| risk mitigation policies.
|
| It's not just a matter simply of inserting rows in a table -
| there is overhead and other matters to consider.
| makeitdouble wrote:
| > simple [...] unlimited
|
| I like how just explaining your concept makes it seems almost
| impossible in one word.
|
| Otherwise, from a bank perspective having a set of legal
| obligations for each account it handles feels like a
| nightmare. If you split your 10 billions into an infinitiy of
| smaller 1000s accounts, is it supposed to guarantee all of
| them if it goes under ? Does it report and audit each single
| account etc.
|
| If these "accounts" are just a virtual partition of your
| money and all follow the same rule, why wouldn't you just
| deal with them as separate entities in your excel sheets and
| let the bank have it as it is now ? If you have a clear
| business use (e.g. those are "wallets" for your customers)
| there are already banking entities providing these services,
| it's a matter of paying them enough to work with you.
|
| For non business accounts there are already clear cases where
| you would create new accounts (money that effectively needs
| to be under a separate ownership, or bound to a specific
| legislation, rule or currency), so it's not like there
| currently is a limit on account creation, the friction added
| to create one is actually protecting the system from abuse.
| dkarp wrote:
| My bank offers this by giving you virtual accounts (called
| pots). They are, like you say, just partitions of the same
| account, but it is useful to have them in the bank as
| opposed to in a spreadsheet. Bills only come out of the
| bills pot, savings are fenced off from outgoings etc.
|
| Salary gets automatically sorted into the pots when
| received.
| [deleted]
| abecedarius wrote:
| In legacy finance, when you pay someone with a check or
| wire, they get your account number and from then on can
| debit more from your account anytime they want, restrained
| only because you can dispute it after the fact. The
| obvious, reasonable way to fix this is to create a new ID
| number for each payment. We have computers now. The
| friction you like here is doing the opposite of protecting
| the customer from abuse.
|
| (I think I've read about some banks offering this as a
| special feature.)
| vanviegen wrote:
| The Dutch Bunq bank has described itself as a bunch of nerds
| with a banking license. Their plans include a large number of
| accounts, physical cards that can be dynamically coupled to
| any of them, an API, zapier integration, among many other
| non-traditional features. https://www.bunq.com/benefits
| TeMPOraL wrote:
| Their feature list certainly looks impressive, it might
| just be the bank I was looking for.
|
| One thing I can't quickly glean from their pages is: can I
| get proper API access to my account if I'm just an
| individual user, with no exorbitant price hike,
| requirements to be a large business, or to enter into an
| additional business relationship with the bank?
|
| The litmus test I have for the dream bank I'm looking for:
| can I have a normal account and get an API endpoint, to
| which I could point a script and fetch my balance and
| transaction history? Without being forced to go through a
| browser to authenticate on each request, or any other kind
| of interactivity?
| vanviegen wrote:
| I think that your litmus scenario should be doable with
| all EU banks, for PSD2 compliance.
|
| The Bunq API allows you to do a lot more than that
| though. https://www.bunq.com/api
| _448 wrote:
| > if I give you a special code that I create you can take an
| amount of money directly from my bank account, specified by the
| code. No need to use something like stripe.
|
| You just described OpenBanking in the UK, SEPA in the EU and
| NPI in India.
| vineyardmike wrote:
| > give you a special code that I create you can take an amount
| of money directly from my bank account, specified by the code.
| No need to use something like stripe.
|
| > give you a special code that I create you can take an amount
| of money directly from my bank account, specified by the code.
| No need to use something like stripe.
|
| That is a check, but digital.
| skytreader wrote:
| > No need to use something like stripe.
|
| Why wouldn't you consider using a third party (no idea if
| Stripe can actually do the example described) as true
| innovation in this space? With a third party layer, banks don't
| need to reinvent the wheel.
|
| > Got a deposit via Venmo? It goes to X. From your work? Goes
| to Y.
|
| FWIW, this sounds analogous (not exactly like) N26's
| closed/semi-closed digital wallets[1]. I guess if there's a use
| case for the example you proposed, it's not a huge leap to go
| from here.
|
| Alas, I'm a very basic bank customer so I can't vouch for how
| good this feature is right now.
|
| [1] https://n26.com/en-eu/digital-wallet
| endisneigh wrote:
| Third parties are true innovation for sure, but the specific
| examples cited in the article weren't necessarily innovative
| IMHO.
|
| Crypto, (and I'm really not a fan) is at least doing some
| objectively innovative stuff. However it's not really linked
| with traditional fiat so isn't applicable broadly.
| Aeolun wrote:
| > With a third party layer, banks don't need to reinvent the
| wheel.
|
| With a government mandated transfer method, nobody needs to,
| and all banks are interoperable.
|
| I personally really like my bank transfers between any bank
| in the Netherlands being near instant.
| lottin wrote:
| > The future is programmable money. That's innovation IMHO.
|
| You think? I can't imagine a situation in which programmable
| money would be an advantage.
| causi wrote:
| Yeah I wish my credit union had more controls. I appreciate
| being able to set transaction limits and GPS-limited
| transactions, but I want daily limits and also a transaction
| timer. For example, I don't want more than one transaction in a
| single five minute period. That would eliminate all instances
| of accidental double-charging.
| bduerst wrote:
| You still sometimes get transactions and fees within seconds
| of each other you - i.e. I had an ATM charge me the amount of
| cash withdrawn once and then the fee as a separate
| transaction.
|
| I get that you want to stop identical transactions within 5
| minutes of each other, but I have a feeling there may already
| be stopgaps in place for something that simple.
| PascLeRasc wrote:
| I'd like to have new charges queue up like the Hey email
| screener for me to approve or deny.
| 5faulker wrote:
| Relative to what the government/banks are doing, the
| cryptosphere is doing so much better.
| knownjorbist wrote:
| It's so strange how much dislike HN has for crypto and "web3"
| more broadly, despite being so evidently ignorant of it here.
| They're literally circling around what has been going on for
| years in DeFi(and really exploding in activity right now as
| we speak). Their loss I guess.
| r-bar wrote:
| I have been dying for this. Currently I use privacy.com and
| their spending limits to get the most basic of functionality. I
| would my bank to provide an API and make this type of control
| and other information available. Maybe I could really dream and
| it would be standardized across banks.
| foxcurve wrote:
| We're building retail accounts with exposed APIs. I encourage
| you to send me an email (check profile) if that's something
| you're interested in.
| Tankenstein wrote:
| Wise lets you access your account and money with API-s. You
| can create a personal token (and webhooks if you want) at
| https://wise.com/settings and you're off to the races. Api
| docs are at https://api-docs.wise.com
|
| Disclaimer: I work on Wise. (We're hiring: https://wise.jobs)
| milesvp wrote:
| I have to respectfully disagree that this isn't innovation. I
| would very strongly argue that innovation is doing something
| that the established players believe to be impossible.
|
| From the article: >>The financial industry thought, for many
| years, that the customers added or retained by these
| improvements would be disproportionately expensive to service
| and low-revenue. Cash App has experimentally disproven that.
|
| The fact that there are players in the financial field doing
| what the incumbents wouldn't and being profitable doing it is a
| pretty good indicator that innovation is happening in the
| industry.
|
| >>True innovation would be more control over your money.
|
| I won't argue that a higher bar might be for you to have more
| control over your money. But the article very much addresses
| this very thing. The innovation you may be missing, is that
| there are many unbanked individuals in the US (>5% based on a
| quick search), and this article claims this demographic is
| finding it easier to become banked, with less predation. This
| is probably a much greater increase in their control over their
| money than the marginal increase programmable money is going to
| have for your control.
| endisneigh wrote:
| Most of the things in the article were possible in the 2000s
| via _credit unions_ , just not _banks_ in the USA. I honestly
| don 't think it's innovation in any meaningful sense. That's
| to say nothing about the rest of the world.
|
| Alliant for example has had same-day ACH for a while. Many
| credit unions also removed the ability to overdraft by
| default (technically this was always possible with a bank if
| you called).
| ootsootsoots wrote:
| So it's etherium?
|
| It's all wrapping my electrons in a database in firewall rules.
| The database outputs are pegged to one social meme or another?
| Max_aaa wrote:
| You missed, disruptive and saleable.
| [deleted]
| black_13 wrote:
| 2008
| habitmelon wrote:
| Why does a free basic checking account mean some some depositors
| are being subsidized? Is it the interest? The cost of storing an
| extra record in a database?
| simonebrunozzi wrote:
| > If you say the words "financial innovation" many people
| incorrectly believe it is largely negative
|
| Hmm. I'm not sure I agree. I'd say instead that most people are
| doubtful that financial institutions are playing nicely, and/or
| that "fairness" is increasing.
| handrous wrote:
| Current government treatment of finance and big business (and
| free trade, and neo-liberal policies generally) is pretty
| unpopular among voters for either major party. Whole thing's
| regarded as a bunch of self-serving bullshit for the ultra-rich
| and the wannabe-ultra-rich, of zero or negative value to normal
| folks (I'm not claiming that's correct, mind you).
|
| It's one place where there's a _huge_ gap between the average
| voter and either major US party 's platform, and certainly
| between the average voter and actual laws & enforcement. It's
| why a certain lately-prominent political figure made the
| tactical decision to ignore their party's platform and court
| voters directly--and it worked.
| trixie_ wrote:
| It's interesting to think that before Bitcoin, money really had
| no digital form that could exist independent of a bank. Like I
| can store cash in my wallet outside of a bank, and give it to
| someone else without going through a bank. That concept didn't
| exist electronically before Bitcoin. Services like PayPal made
| for a similar experience, but it was only an abstraction over
| bank to bank transfers.
|
| So cool now that we actually have a fully distributed and digital
| form of money. So much innovation is happening right now to
| explore all possibilities of this new capability we have.
|
| Already moving Bitcoin compared to an ACH or Wire Transfer is
| night and day. Much faster with no limits or constraints, or even
| having to pass money through a bank as an intermediary step.
| clumsysmurf wrote:
| > Zelle was, in large degree, a response by banks to avoid being
| disintermediated by the payment apps
|
| Curious what the HN crowd thinks about this ... was this a good
| or bad thing?
| marban wrote:
| Let's keep in mind that these micro revolutions apply mostly to
| the archaic US system and have been somewhat standard in other
| parts of the world.
| smoovb wrote:
| Highly US-centric article, would be good to be labeled as such.
| zz865 wrote:
| Yeah its happening because fintechs are getting around the rules
| that were introduced on the traditional banking system. Anti
| money laundering, KYC, loan regulations, rules to open branches
| in certain demographics, dodd-frank etc - all this stuff isn't
| free, the traditional banks are drowning in rules and
| regulations. I know I used to work there.
|
| Of course you can create a simple service that ignores all those
| rules and it'll be cheaper.
| wiseowise wrote:
| I worked for both, you're wrong.
|
| The difference between fintech and traditional banks is that
| former treats tech as revenue driver and latter as cost center
| and it feels in literally every step.
| deeg wrote:
| Don't forget the massive bureaucracy at traditional banks. I
| worked at a small company that was building a payments
| platform for a large US bank. The amount of turf-protecting
| between the different payment types within the bank was mind-
| boggling. Everything was highly compartmentalized and it
| could take weeks to get a config setting changed on a test
| server. It was an interesting experience for me watching from
| the outside.
| sarora27 wrote:
| I currently work for a fintech and i can argue we're not
| getting around the rules, we're just able to move faster on it.
| We have invested a ton of resources into things like AML, KYC,
| and ensuring compliance. The only difference between us and a
| bank going through this is that we get to generally work w/
| newish systems and minimal bureaucracy. Meanwhile banks have to
| work w/ much more antiquated systems and bureaucracy that makes
| it harder for them to move at all.
| jamesshamenski wrote:
| If you haven't moved people to crypto, you're enabling the
| problem.
| mbesto wrote:
| Fun fact - most of these "innovative" banks (Chime, Mercury, Rho,
| etc.) are just "skins" on top of legacy banks that built out APIs
| (which in itself is probably innovation). I'm not aware of any
| classic "bank" that does the old boring retail stuff that Chase,
| BoA, etc. do but add in APIs, free wires, etc.
| patio11 wrote:
| Happy to answer any questions or take requests for future issues,
| HN. (This is the second issue of my new weekly newsletter.)
|
| Edit to add: Incidentally, while I'm always thrilled when my
| stuff ends up on the front page, I'm also a member of this
| community and know that there's a limited tolerance for the same
| sites ending up on here on a weekly basis. In previous years I
| spaced out releasing essays to not annoy y'all, but I can't do
| that with a weekly newsletter, so if folks can be selective in
| submitting these here I'd appreciate it.
| TameAntelope wrote:
| Okay, so the obvious question is... crypto. Do these large
| institutions have any interest in opening up interfaces to the
| crypto ecosystem, are they skeptical as hell about the concept
| generally, is the technology mature enough to start seeing
| integration with common tasks like sending money in these
| popular "instant" apps (e.g. Venmo uses a stablecoin to
| transfer money, without even showing the crypto part to the
| user)?
|
| I'm wondering if my local credit union wants to hold my BTC for
| me, if I wanted to do something like that.
| stevebmark wrote:
| You mean a system built on Proof of Waste where it takes
| minutes to confirm transactions using large amounts of energy
| purely to guess random numbers, that's literally designed to
| get harder and generate more waste the more it's used, and is
| full of scams and treated purely as a highly volatile
| commodity with limited realized practical use, where
| blockchain "technology" is so poor that you can only put a
| URL in a block, so NFTs aren't connected to anything (and
| used for many scams), and where each news article about smart
| contract failures is somehow more hilarious than the last? I
| sure hope banks don't navigate into this space.
| throwaway98797 wrote:
| Buy a nft. See if that changes your perspective.
| whimsicalism wrote:
| I'm hardly a crypto-stan, but I get tired of the same
| recycled complaints.
|
| There's a move towards PoS, crypto is not synonymous with
| PoW.
|
| You'll be displeased to know that scams occur with fiat as
| well as crypto.
| handrous wrote:
| > I'm wondering if my local credit union wants to hold my BTC
| for me, if I wanted to do something like that.
|
| They'll do that now with a piece of paper in a safe deposit
| box, no? Other options for their holding your BTC, including
| ones that let them make money off it and so offer interest to
| depositors, seem like they'd open up the same risks as
| existing relatively-reputable exchanges.
| Meekro wrote:
| A piece of paper in a safe deposit box is, unfortunately,
| not risk-free. There have been some incidents where, for
| example, the owner of box #1343 loses his key and asks the
| bank to drill the box, so they drill box #1434 and give him
| the contents (hopefully your paper wallet does not say
| "MILLIONS OF DOLLARS IN UNTRACEABLE EASY-TO-STEAL CRYPTO"
| at the top!) Also, floods have resulted in box contents
| being destroyed (a bigger problem in some cities than
| others.)
| kamarg wrote:
| Not to mention most safe deposit boxes are insured for a
| few hundred dollars max unless you've specifically bought
| additional insurance. So if the bank does screw up and
| give your box contents to someone else, you can only
| recover a very minimal amount of the value.
| frogpelt wrote:
| You left out fee-free stock trading which is commonplace now.
| Maybe you were intentionally focused more on the banking side.
| mdp2021 wrote:
| What about security? A number of innovations seem to overrely
| on new options which could offer potential for breach.
| tantalor wrote:
| The innovation I've been waiting for is FedCoin (digital
| dollar).
|
| The details are a little hazy, but I'm expecting real instant
| transfers (not just between people but also between your own
| accounts at different institutions) and free access for
| everybody in the US.
|
| Like crypto, but with real money.
| lifeisstillgood wrote:
| I agree completely- the overhead of bitcoin and other crypto
| is only useful if we don't trust our governments / banks. As
| we trust them exactly as much as we do, we may as well have a
| blockchain run by the Fed / BoE and just have zero margin
| cost per transaction.
|
| I am slightly terrified of the short term consequences but
| it's a good idwa
| rfd4sgmk8u wrote:
| Central Bank Digital Currencies are a dystopian nightmare.
| They permit all kinds of financial shenanigans like automated
| negative interest rate, demurrage, financial censorship and
| control.
|
| Cryptocurrency already is real money. Its more real than
| anything the state can print from nothing.
| mountainofdeath wrote:
| Most of the advantages cryptocurrency fall into one two
| categories.
|
| 1. Speed improvements over the legacy infrastructure e.g.
| instant transfers without a middleman. Itself, mostly a
| problem just in the USA. 2. Bypassing various international
| and national regulations.
|
| Central bank digital currency retains #1 while rejecting #2
| which is important for a nation's sovereignty.
| rfd4sgmk8u wrote:
| Don't forget (the primary reason Bitcoin was invented) 3.
| The lack of ability for central banks to inflate the
| monetary supply.
|
| "The central bank must be trusted not to debase the
| currency, but the history of fiat currencies is full of
| breaches of that trust." --SN
|
| 3. is important for ensuring you don't have the time
| value of your savings destroyed by inflation.
| bduerst wrote:
| The tradeoff is lack of controls and ridiculous price
| volatility. The fed may not be perfect with the USD, but
| at least it's stable and supports global economies.
| capableweb wrote:
| > free access for everybody in the US.
|
| As long as you're not previously convicted, registered sex
| offender, poor credit score or otherwise a "lower" human.
|
| > Like crypto, but with real money.
|
| "FedCoin" (a digital currency operated and maintained by a
| central authority) sounds like the opposite of a
| cryptocurrency.
| Folcon wrote:
| Reading this segment feels like it was terminated prematurely?
|
| > Free checking wasn't free. Instead of most depositors paying
| a predictable (and relatively small) fee for their checking
| account, a tiny portion of the depositor base was assessed
| many, many $25-$35 fees stochastically based on how frequently
| their incomings and outgoings were temporarily mismatched.
|
| Specifically the "depositor base was assessed many, many" part.
| Feels like the many before the comma is missing something.
| Maybe it should be times? "a tiny portion of the depositor base
| was assessed many times, many $25-$35 fees stochastically"
|
| Not certain though.
| xsmasher wrote:
| Some of the depositors were assessed "many, many $25-$35
| fees."
|
| Could have been rewritten as "repeatedly assessed $25-$35
| fees" but it's understandable to me.
| Folcon wrote:
| I'd agree with that rewording =)...
|
| Just was a bit of a mental hiccup when I was reading which
| is probably why I picked up on it.
| Arcuru wrote:
| It is an odd piece of grammar, but I've heard it fairly
| often. I'm not sure if it's proper English or not.
|
| "many, many" is a different way of emphasizing the word
| "many". So "assessed many, many fees" implies that there were
| more fees assessed than if they had just stated "assessed
| many fees".
| Folcon wrote:
| Interesting, thanks for the heads up.
| axg11 wrote:
| Just let the market decide ;)
| simonebrunozzi wrote:
| Hey Patrick, I always enjoy reading your stuff. For this
| particular piece, it's a pity that you don't have a specific
| view on Europe. I'm sure it's difficult to know every detail.
| Perhaps it's a good opportunity to involve someone at Stripe
| who knows e.g. the European side of things? Or even how things
| are in Africa? (Matteo Rizzi of Fintechstage comes to mind,
| amazing experience in anything fintech-related in Africa).
| dr_dshiv wrote:
| Not to be super cynical, but it would be embarrassing and
| reveal that there is not really any innovation. I kept
| cringing and thinking "didn't they do this in Europe
| (Netherlands) decades ago?"
| mherdeg wrote:
| How does the best price you give for JPY->USD ($10 for $1,000
| with Wise) compare with OANDA fxTrade?
|
| I think their current posted fees are 1.4% spread-only ($14 for
| $1000) or 0.3% spread plus core fees. I can't quite tell from
| the rate sheet but looks like 550 JPY for a 100,000 JPY trade.
| I guess that would work out to about ... $8.50 per $1000? Is
| that right?
|
| If you have a local bank that allows foreign depositors to
| exchange at 0.3 JPY/1 USD, does that mean you pay about $2.50
| to convert 1000 USD?
| patio11 wrote:
| If one has to do this frequently and in size the best way I'm
| aware of is Interactive Brokers, but for most customers doing
| $1k transactions (like me back in 2004 to pay my student
| loans) $8.50 and $10 are the same number but the $60 the best
| option cost back then (GoLloyds, now operated by Shinsei, if
| anyone is curious) was not.
| ska wrote:
| This is key I think. Paying a couple extra dollars for
| convenience to avoid getting screwed by retail rates on
| $1000 or so once in a while is an easy yes.
|
| OTOH, if you are even at 5-6 figures regularly you start
| paying attention to all the fractions, and bit more pain in
| the ass interface is fine. At one point I used to do this
| directly with a FX desk which was a bit fiddly but saved me
| a bunch over a few years.
| mherdeg wrote:
| It's true when I was routinely repatriating income with a
| forex trading desk the experience was not totally
| streamlined and paying attention to the spread and rates
| pretty closely. But also I got out "lucky" by exiting at
| 1 GBP/1.62 USD (moved home a while back), and the timing
| mattered a lot more than the rates
| umeshunni wrote:
| Great post that provides an overview of recent changes in
| banking.
|
| Something you should add here is that free banking is also made
| possible due to the economics of the Durbin Amendment of the
| 2010 Dodd Frank act that allows smaller financial institutions
| to charge a higher interchange fees on debit transactions.
|
| Most Fintech/Neobank players like Chime fall into this bucket
| and they are able to fund the operational cost of the checking
| account with the interchange fees of the debit card.
| ksdale wrote:
| I believe he mentioned that in the first newsletter!
| tl wrote:
| Unfortunately the market-clearing price (in karma) for someone
| posting your article is greater than zero, ensuring that
| nothing short of regulation would prevent it.
| tablespoon wrote:
| > If you say the words "financial innovation" many people
| incorrectly believe it is largely negative (or at least risk-
| taking) or not happening. This is incorrect. The world is
| actually getting better, within our own lifetimes.
|
| I think what may be going on is that "financial innovation" is
| being used to refer to different things. I think when people say
| "financial innovation" is negative, they're referring to "high
| finance"/Wall Street type stuff like CDOs, but this article
| mostly talks about retail bank accounts.
| Apocryphon wrote:
| > Most of what we think of innovation is really business model
| innovation, rather than technology innovation. We are more
| easily amused and excited by the latter, but what changes our
| lives more often is the former. Business model innovations
| rarely capture the imagination of the masses or present well on
| short time-horizon focused mediums, say Twitter, but they
| matter.
|
| https://www.readmargins.com/p/jokes-you-invented-bad-jokes
| patio11 wrote:
| A major purpose of writing these is to eventually convince
| folks who love cheap mortgages and well-funded pensions but
| hate CDOs that they have an incomplete model of how the world
| works and an inconsistent preference set.
| Ensorceled wrote:
| Do you have a better answer than "you just don't understand"?
|
| I am also under the impression that much of "high finance" is
| problematic, the industry seems to be often parasitical and
| rife with problems such as insider trading and market
| manipulation.
| patio11 wrote:
| Consider this a pre-commitment to write someday, at
| excruciating length, why many of the features that
| Americans take for granted about mortgages depend on a)
| mortgage securitization (CDOs) and b) the U.S.'s quixotic
| policy to massively subsidize the supply chain for
| homeownership and, thereby, homeowners.
| pdonis wrote:
| While the details of the connection would of course
| require a long article to discuss, I think the basic
| observation involved is simple. Just compare these two
| facts:
|
| (1) Americans expect to be able to get 30 year mortgages
| at rates around 3 percent;
|
| (2) Americans expect to be able to invest their
| retirement savings in stocks and bonds with a long term
| rate of return of 8 percent or more.
|
| These two facts make no sense when put together unless
| somebody is putting a massive thumb on the scales
| somewhere. In a free market such a situation would be
| impossible, because nobody would have any incentive to
| lend money for 30 years at 3 percent when they could just
| invest it in stocks and bonds over the same time horizon
| and get 8 percent.
| tablespoon wrote:
| > mortgage securitization (CDOs)
|
| I don't think those things are synonymous. You can have
| mortgage securitization without CDOs.
|
| IIRC, the issue with CDOs was they were used to
| "innovatively manufacture" "low risk" investments out of
| high risk assets. They were so complicated that
| sophisticated professional investors lost track of the
| underlying situation, made decisions based on a flawed
| model of them, then got caught with their pants down when
| their model failed.
| kasey_junk wrote:
| Any argument against a CDO is implicitly an argument
| against a mortgage backed security. In fact, CDOs by
| their nature can be _more_ decoupled from systematic
| mortgage risk. So while you could theoretically have
| securitized mortgages without other kinds of CDOs its
| largely not something that makes mortgage securitization
| less risky.
| quacked wrote:
| Ooh, can you tie in the final abandonment of the gold
| standard, the introduction of the IRA/401(k), and the
| relationship between insane over-leveraged derivatives
| markets and American consumer financial health?
|
| Afaik, the successful tying of the consumer investment
| (and especially retirement) account to the performance of
| the _financial_ market (rather than to the parts of the
| market that manifest themselves in more physical ways)
| has created a situation where any large-scale decision
| that might improve the material lives of Americans but
| would harm the 'market' (via lowering the value of the
| USD or certain fund share prices) has become untenable.
|
| Millions of voters can be controlled by trotting out
| "never hurt the market because then what will happen to
| your investments?" whenever something interesting comes
| along. I'm certain that the enormous subsidization of the
| housing market and the associated treatment of housing as
| a primary investment vehicle for those same voters is
| related.
| tablespoon wrote:
| > Millions of voters can be controlled by trotting out
| "never hurt the market because then what will happen to
| your investments?" whenever something interesting comes
| along.
|
| The 401k has served as a clever trick to get large
| numbers of laborers to support policies that mainly
| benefit rich capitalists and to oppose many policies that
| would help themselves.
| quacked wrote:
| That is precisely my position. It is a scam; producing
| very little value that didn't already exist for Americans
| while enriching the owners of the 401(k) portfolios
| beyond nearly anyone in history.
| mountainofdeath wrote:
| What you describe is mostly a political decision that
| effectively subsidizes the mutual fund, broker and
| financial planning markets and the broader equities (and
| to a lesser extent, fixed income market) to the benefit
| of...you guessed...people who already own it. Pension
| funds invest in many of the same things everyone else
| invests in, directly or indirectly.
|
| The difference is now you have millions of amateurs with
| small sums versus a few hundred professionally managed
| institutions. Either way, the little guy loses.
| smoovb wrote:
| "ACH moved to same-day settlement (rather than next-day
| settlement) in 2018" Thailand, and most of Asia has had instant
| transactions and no concept of over draft fees. And since 2017,
| nearly all bank to bank transactions are free, and irreversible*.
| So why is the US behind?
|
| Seems one of the biggest hurdles for US banking are the guard
| rails on financial products. The ability to pull back funds and
| reverse transactions creates the excess fat that keeps banking
| expensive and processes slow. 'Get paid, stay paid' as seen in
| blockchain, resolves this.
| petesergeant wrote:
| > nearly all bank to bank transactions are free, and
| irreversible ... 'Get paid, stay paid' as seen in blockchain
|
| A key difference here is that if you screw up your payment in
| Thailand, you have legal recourse to reclaim your funds. If I
| fat-finger my rent to the wrong Khun Somchai, and he thinks he
| wants to keep it, I can use the legal system to get the money
| back from him (and he knows that), and what's more I know full
| well that his bank will know who he is and where he lives.
|
| If I send money to the wrong Bitcoin address, nobody can help
| me with that.
| Kranar wrote:
| This is simply false. Legal recourse is always available,
| whether sending money using Bitcoin, or any means whatsoever
| (by mail, by dropping a suitcase full of cash). Your legal
| rights don't vanish just because you used one medium over
| another.
| bduerst wrote:
| No they're right. How would you have legal recourse against
| someone you don't even know?
|
| Bitcoin addresses are anonymous. Sending to the wrong
| address is not sending to a wrong KYC bank account. There
| are no mechanisms in place to rectify that with Bitcoin,
| which is a bug, not a feature.
| knownjorbist wrote:
| Bitcoin addresses are pseudonymous. There are ways to
| make transactions safer for all parties involved such as
| escrow and social recovery.
| bduerst wrote:
| Yes, which means Bitcoin addresses are anonymous as far
| as this conversation about disputes is considered. It's
| even being generous considering the probability that it
| could accidentally go to a dead address and be lost
| forever.
|
| Third party escrow isn't unique to bitcoin, and on top of
| not being competitive can be painful.
| tablespoon wrote:
| > A key difference here is that if you screw up your payment
| in Thailand, you have legal recourse to reclaim your funds.
|
| The legal systems are pretty important pieces of technology
| that solve real practical problems.
|
| > If I send money to the wrong Bitcoin address, nobody can
| help me with that.
|
| Bitcoin is a bit like introducing an electric car without
| seats, seatbelts, or a windshield. Sure there's some
| innovative bits there, but the hype forgets it's missing very
| important features. It's even more astounding that the hype
| men sometimes try to spin the lack of those features into a
| selling point.
| pcwalton wrote:
| > The ability to pull back funds and reverse transactions
| creates the excess fat that keeps banking expensive and
| processes slow.
|
| For the victims of, say, Madoff, the ability for the
| authorities to intervene was very much not "excess fat".
| smoovb wrote:
| This is just the "think of the children" argument.
|
| Think of credit card fraud and the $25 billion lost to it
| every year(half a Madoff). Then countless start ups,
| engineers and customer service employees that all deal with
| the excess fat of correctly routing payments. All these
| resources to put guard rails on a flawed process, funded by
| the 3% skim off the top.
|
| Blockchain for finance demands high user accountability, a
| refreshing change for anyone who's been on the other end of a
| reversed payment.
| Insanity wrote:
| Moving to Canada from Belgium, one of the most frustrating things
| is the banking ecosystem. It feels so far behind on what I'm used
| to, from the banking apps to transferring money to having had to
| use actual _cheques_ to rent a condo.
|
| EDIT: Like paper cheques, I didn't have to use those in my 30
| years in Belgium prior.
| lmilcin wrote:
| > Free-as-in-beer banking
|
| If you think your banking is free just because you don't
| explicitly pay for your credit card or your checking account you
| are seriously deluded.
|
| Banks have injected themselves into the stream of payments for
| goods and services and are now getting cut of almost every your
| transaction. They have architected entire process very cleverly
| so that you, the consumer, do not need to be aware of the amount
| of money you are paying and the merchant, service provider has no
| way to protest.
|
| It makes sense for them to reduce the visible part of the cost to
| 0 just to get you lulled into sense of everything being free.
| Banks _want_ you to think so. Most people are inept at how banks
| are making money and for banks this is how they like it to stay.
|
| In reality, you pay hefty tax on every purchase you make with a
| credit card which is costing you way more than you would accept
| if that sum was to be paid in monthly installments.
|
| I have been working for banks and credit card companies for the
| best part of the last two decades.
| originalvichy wrote:
| As technologically advanced as many aspects of life in the US
| seem to look like for an outsider, I am baffled that the finance
| overlord of the world somehow came 10-15 years late to next-gen
| banking.
|
| I went to an African un-recognized state in 2009 and people
| already were using SMS-based mobile phone money transfers to
| conduct daily business or send money to their contacts. I also
| live in the Nordics.
|
| If a country with an advanced national ID system and a developing
| country with barely a government could both leap into the next
| generation of personal finance, what took the US so long?
| mattnewton wrote:
| I think the answer is that the pain wasn't enough in the US to
| encourage the kind of innovation you saw in Africa. The
| marginal benefit of paying with your phone instead of card in
| your wallet is actually pretty small for most Americans, and
| much of it can only can be realized until you can leave your
| wallet at home. Similarly for other innovations where the
| incumbent was "good enough," ubiquitous, and already built.
| ksdale wrote:
| I remember reading about mPesa back in the day, and the article
| was talking about how there wasn't really any choice but to do
| SMS payments because there wasn't infrastructure for anything
| else. It's next gen, but also kind of the opposite of that...
|
| I'm also sure that in 2009, there was population the size of
| the Nordics that was using mobile payments in the US, but the
| US is a large place.
| thrashh wrote:
| It's not baffling at all to me.
|
| If I built my house 20 years ago, it would be up to date as of
| 20 years ago. Someone who builds their house today would have a
| house up to date as of today.
|
| I can update my house to be up to date now but it's going to
| cost a lot of money on top of the money I already spent
| building the thing. I might wait another 5 years first so I
| have the improvements discovered in the next 5 years.
|
| You can't be constantly up to date. It's too expensive. You
| have to up to date in cycles.
| andrewf wrote:
| I watched HBO streaming on a domestic GOL flight in 2019 - a
| Brazilian low-cost airline. I couldn't do that on the United
| flights which took me SFO -> IAH -> GRU. I figure United
| installed/contracted for their solution 10+ years ago. GOL
| introduced in-air Internet in 2016:
| https://www.zdnet.com/article/brazilian-airline-gol-
| offers-i...
| kebman wrote:
| A whole article on financial innovation, and not one mention of
| crypto or defi? Not even Bitcoin?
| wiseowise wrote:
| Crypto is not financial innovation.
| ghtt75 wrote:
| So what type of innovation is it then?
| knownjorbist wrote:
| How can any serious person with knowledge of the subject say
| this with a straight face?
|
| There are entire classes of financial instruments in use
| today that could not exist in the tradfi ecosystem. Pretty
| sure that's "financial innovation".
| [deleted]
| jamesshamenski wrote:
| The reason I stopped reading HN (looking deep into the mirror)
| is that all the smart people here generally have a negative
| sentiment to something that's math based. It's a head scratcher
| but easy for me to move on after 14-ish years of being here.
| pcwalton wrote:
| None of the objections to cryptocurrency have anything to do
| with the fact that it's "math based". Traditional money is
| also in fact based on math.
| bduerst wrote:
| Making an appeal to math doesn't mean something a well
| designed or even a competitive solution.
| haskellandchill wrote:
| It doesn't seem you are being very intellectually generous to
| the smart people who have come to different conclusions.
| Crypto doesn't meet my needs but I understand how someone
| with strong views on monetary policy, government,
| institutional trust, etc will see value there.
| deepvibrations wrote:
| So many people are still ignorant of the space, especially
| Stripe who's business will suffer if crypto really takes off.
|
| Those who say there is no innovation simply haven't looked deep
| enough, everyday i see cool new ideas in crypto, infact today I
| saw a 'streaming payments' service, so you can get your salary
| streamed to you constantly as opposed to a monthly payment -
| how cool is that?! Love all these ideas! Seems things move
| faster in the crypto space, as people are less concerned with
| formalities and processes. Sure this will lead to some big
| failures, like the occasional defi hack, but it also leads to
| brilliance in some areas, so to just say 'there's no innovation
| in crypto' is complete ignorance imo.
| OldHand2018 wrote:
| > ACH payments historically operated on a daily or twice daily
| batch processing, and they're (importantly) "negative confirmed."
| This means that you do not get immediate reliable feedback that
| an ACH transfer or withdrawal has succeeded. The association's
| rules require financial institutions to report errors (via even
| more batch processing) within 5 business days, and given that
| errors are expected in the ordinary course (most commonly,
| insufficient funds, since funds availability is not and cannot be
| guaranteed at transaction time), businesses and banks have to
| make decisions on what degree of risk they're willing to
| tolerate.
|
| A colleague of mine years ago told me a story about check
| clearing in the "old days". Northern Trust in Chicago handled a
| large percentage of check clearing for the entire US. Their back
| office building had a heliport because they had a twice-daily
| cargo flight from O'Hare filled with all the checks that needed
| to get cleared. I almost feel like the batch processing was
| because of the scheduled delivery of the physical checks to these
| processing centers around the country.
| [deleted]
| RileyJames wrote:
| > " Free checking wasn't free. Instead of most depositors paying
| a predictable (and relatively small) fee for their checking
| account, a tiny portion of the depositor base was assessed many,
| many $25-$35 fees stochastically based on how frequently their
| incomings and outgoings were temporarily mismatched."
|
| In Australia this became illegal at some point. Maybe 10~ years
| ago. I believe the specific regulation was something about the
| fee must represent the cost associated. And obviously, the bank
| doesn't actually incur any cost to reject a payment. Most
| definitely not $35 worth.
|
| But they could argue they incur some cost related to a negative
| balance. They're lending the customer money. So CommonwealthBank
| (CBA, major bank, and likely many others) gave everyone a $500
| over draft on their "checking account" (colloquially not referred
| to as "checking" in Australia).
|
| So now your account didn't go negative, or reject payment.
| Overdrawing your account was a feature, and you paid for it.
|
| Having an overdraft feature was free. You were charge a fee each
| month based on how much you used your overdraft, plus interest if
| you carried a negative balance. 1-100 of overdraft was $9. The
| full 500 was $27 or $35.
|
| So effectively they reimplemented a very similar fee structure as
| a product.
|
| While the outcome was similar, this feels a lot less scumbagy.
| tinco wrote:
| Sort of same here in the NL, at some point over a decade ago
| they introduced overdraft mode for your account. It was 800
| euro initially, and now it's tied to your income somehow. It's
| free but there's interest payment on the overdraft. And you're
| not allowed to be in overdraft continuously for over 3 months.
|
| It's always been opt-in, you have to enable it for your
| account.
| lvl100 wrote:
| If financial innovation means more nickle and diming people for
| every single transaction, I want to say NO THANK YOU.
| pcwalton wrote:
| Most of the article is specifically about how financial
| innovation has resulted in less "nickel and diming" people for
| transactions.
| switch007 wrote:
| > Free checking wasn't free. Instead of most depositors paying a
| predictable (and relatively small) fee for their checking
| account, a tiny portion of the depositor base was assessed many,
| many $25-$35 fees stochastically based on how frequently their
| incomings and outgoings were temporarily mismatched
|
| This is a really great point which had never occurred to me.
|
| Free current accounts (as we call them in the UK) are the norm.
| We had - or still have? (I haven't kept up) obscene overdraft
| charges too. If my memory serves me right, people paying
| PS10-40/mo in overdraft charges wasn't uncommon. I feel our
| situation is/was even worse because free accounts were the norm.
|
| When paid accounts did get introduced, but they came bundled with
| things like extra interest, insurance etc, so you kind of broke
| even (not so much now).
| andremendes wrote:
| Same-day settlement is cool but how about instant transfer
| between different banks? Brazilian Pix has it for almost a year.
| truculent wrote:
| Can you call it innovation when much of the world has had it for
| some time? Good, no doubt, but innovative?
| smoovb wrote:
| A more accurate headline would have been: "American legacy
| financial institution innovation is actually happening"
| quacked wrote:
| Wow, it's a patio11 thread with only 8 comments.
|
| I'm close friends with a relative of yours who has worked for
| several major space companies, and we talk about your writing
| pretty frequently. Your articles on salary negotiation, life in
| Japan, and how to build side projects have proven extremely
| consequential for both of us--thank you so much for putting your
| thoughts down as frequently as you do.
|
| Do you think dramatically increasing the speed and lowering the
| cost at which people can participate in financial transactions
| (as appears to be the mission of Stripe and the overall theme of
| your post) will have any effect on the current astronomical
| prices of small-scale international shipping? The costs involved
| in international financial transactions and international
| shipping for small customers seem to be closely coupled, but I'm
| not entirely sure how.
| patio11 wrote:
| Wow, small world. (Give M my regards?)
|
| Logistics like international shipping are both a financial
| infra problem and an infra infra problem. I do think that the
| cost of small-scale shipping is going to come down to approach
| the ratable cost of volume in a shipping container (which, as
| you are aware, it is orders of magnitude higher than now),
| which will likely come from improvements primarily on the infra
| infra side.
|
| Two companies to keep an eye on in this stack are Flexport and
| Shippo, among others.
| quacked wrote:
| Will do, and thanks for the leads.
| fleddr wrote:
| More like fixing the basics of banking that are decades overdue.
| downWidOutaFite wrote:
| This praise of financial innovation absent regulation is
| ridiculous. These are changes on the margins after decades of
| borderline criminal anti-consumer behavior.
|
| You want innovation? Regulation mandating open APIs among all the
| banks would be unleash an innovation tsunami. Don't believe the
| propaganda, regulation is essential for competition and
| innovation.
| ghtt75 wrote:
| There's a ton of interoperability and public API access in the
| cryptocurrency world. All of it was achieved without mandates.
|
| How can you argue that regulation is essential for competition
| and innovation despite such a clear counter-example?
| mr_luc wrote:
| (Man I've liked these first couple of articles).
|
| I see a few comments saying "this is stuff the rest of the world
| has had for a while now."
|
| That's probably true to some extent. But it undersells the value
| being reported on, because the US market is a valuable one.
|
| 'Surprise! The richest, biggest economy in the world had
| banking/financial systems that were inefficient in X, believe it
| or not -- but that's in the progress of being fixed, which means
| Y is now more possible/profitable.'
| ErrantX wrote:
| I suppose the surprise is how long it has taken; here in the UK
| banking has been free for a long time (in fact, non-free
| banking is viewed as innovative!) and faster payments has been
| in place for over a decade.
| rfd4sgmk8u wrote:
| IMHO, The financial innovation is not happening in the tradfi
| space. No charge checking accounts, yawn.
|
| Tradfi is barely struggling to keep up with a rapidly inflating
| fiat. The tiny interest being paid is no incentive to keep funds
| with the traditional banks. We don't need banks to hold that
| dirty fiat, we need digital, tradable, state-intervention and
| censorship resistant assets we can custody and try hold on to
| some value.
| [deleted]
| delaaxe wrote:
| The fact that the author doesn't seem aware that in the future
| all of money will live on public immutable networks makes me
| think he's either out of touch or we're still really early.
| rfd4sgmk8u wrote:
| Yes, we are still early. patio11 is very aware of
| cryptocurrency, he has rejected it for as long as he has
| known about it.
| vorpalhex wrote:
| I mean, confidence counts for something but probably
| insufficient to predict the future. Considering $130M just
| walked off a defi lender today and there is no recovery
| possible, I'd say you have a while to go.
| delaaxe wrote:
| When you think about this too much it starts to seem
| inevitable, but I agree those types of predictions can be
| off by multiple decades
| RGamma wrote:
| Since 1995 everyone has a basic right to possess a free basic
| bank account in Germany (the EU?) including "partial citizens"
| (e.g. asylees), since it's so crucial to societal participation.
|
| The fact the author sells this as innovation speaks volumes about
| the usual treatment of people deemed (near-term) useless to the
| (US) apparatus.
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